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Becoming an ethical investor is not straight forward and deciding where to invest can be very subjective. But if you can find the right product, ethical investors say it can offer peace of mind as well as financial returns.

Putting your money where your mouth is: that's what charity worker Jennifer Morgan believes she's doing. Her savings, current account and pension are all with companies whose principles she believes in.

"I believe my money reflects my values," she says. "I chose to take my money out of a high street bank and put it in a more ethical bank which is invested in renewable energy and companies that are trying to make a positive difference."

Jennifer is not alone.

Since July, Triodos, a bank that specialises in ethical investments, has seen a 78% increase in customer enquiries for people wanting to open savings accounts. New money coming into its accounts has doubled compared to last year.

On the High Street, the Co-operative Bank has seen a 43% increase people switching to their accounts.

So, there's no doubt as to the growing popularity of ethical banking.

"The whole field of green and ethical investments has become much more diverse and mainstream," says Penny Shepherd, chief executive of UK Sustainable Investment & Finance. "In particular it's very much about making a positive choice. We describe it as making money and making a difference in the world."

One of the most important questions when investing in ethical funds is also one of the most obvious: whose ethics?

There is no clear agreement on exactly which companies count as "ethical" and hence which stocks it's okay for an ethical fund to buy into.

With some businesses, like tobacco, most people concur that they are outside an ethical fund's remit. However, it's not always so obvious.

For instance, if you want to invest in an environmentally sustainable manner, does that include nuclear power?

These questions get complicated very quickly.

This week, F&C Investments faced scrutiny when ethical fund management advisor Barchester Green Investment released a report saying the F&C Stewardship Growth fund has 1.6% of its money in Burberry.

Burberry is Britain's biggest fashion house, but has faced criticism from animal rights campaigners like PETA because of its policies on the use of fur.

F&C's ethical criteria mean it is okay for the fund to invest in companies that get less than 1% of their revenue from fur. Burberry only gets 0.2%.

Some ethical funds chose to avoid companies they deem "not to be doing business ethically" according to their subjective criteria.

Others prefer to buy into such businesses, hoping they can use their influence as shareholders to change the firm.

Alexis Cheang, F&C's director of governance and sustainable investments, said: "Different people will have different ethical priorities when selecting an ethical fund. For this reason, the Stewardship Growth Fund has focused on being totally transparent about its ethical policies, which are available in full on the F&C website."

And specifically on Burberry, she added: "At the start of 2012, Stewardship re-reviewed Burberry against its tightened animal welfare policy and following allegations of cruelty towards animals in its sourcing of fur. After meeting the company to raise our concerns about this issue, Burberry confirmed that its involvement in fur is only 0.18% of revenues."

There have also been changes in Burberry's supply chain in order to improve standards, she said. "Based on this information, the Stewardship Investment Sub-Committee re-approved Burberry and was satisfied that the company's approach is in line with the Stewardship criteria for fur."

Meanwhile, Burberry said: "We source natural hides very carefully safeguarding the correct ethical standards and traceability."

So, given how complicated things can be, how does an investor fresh to the idea of ethical investing negotiate such pitfalls?

"If you've never invested before you might want to start with an ethical savings account," says Sarah Pennells, editor of Savvywoman.co.uk.

"Secondly, if you have money you want to invest, think about what you would like to use it for so treat it like an ordinary investment. Think about how long you want to invest the money for and how much risk you want to take, for instance," she said.

Only then does she recommend bringing into your analysis the considerations about ethics.

"Think about what's important to you and where do you want to draw the line," she says. "Don't assume just because it has ethical in the title that it will do exactly what you expect it to do."

But does picking an ethical investment fund mean that you will make better or worse returns than the rest of the market?

"It has been a period where ethical portfolios have not reflected what the mainstream market has been achieving," says John Ditchfield, managing partner at Barchester Green Investment. "But over the longer term we can point to some very good performance by ethical and environmental funds."

It all means for investors like Jennifer Morgan, taking the ethical path is fraught with difficult decisions.

But she says her funds have outperformed the rest of the market since she began investing and has greatly benefited from the peace of mind that comes with believing that her money is making a difference.